The introduction of Domestic Building Dispute Resolution Victoria

Summary

In May 2015, the Victorian Auditor-General’s Office produced a report which was titled ‘Victoria’s Consumer Protection Framework for Building Construction’. The report was highly critical of the level of protection given to consumers in the domestic building space.

As a consequence of the report and many years of consumer complaints arising out of domestic building contracts in Victoria, the Building Legislation Amendment (Consumer Protection) Act 2016 (Vic) (Act) was introduced by the Victorian Government in April 2016.

The Act was introduced to improve the protection of consumers of domestic building work.  The Act has been rolled out over a number of stages.

Implementation of stages one and two of the Act

The first and second stages came into effect in July and September 2016. Some of the most notable changes that occurred during these stages included:

  • The abolition of the Building Practitioner’s Board and the transfer of its functions to the Victorian Building Authority (VBA).
  • Extending the VBA’s powers to owner-built sites.
  • The VBA will now make all decisions in relation to disciplinary action and has put various procedures in place to deal with disciplinary action.
  • New offences have been created for those working without a building permit. These offences are set out in the revised section 16 of the Building Act 1993 (Building Act).
  • Giving more power to the VBA and to building surveyors to direct builders to fix non-compliant building works.
  • Providing a checklist that building surveyors must use when lodging building permits with Council. See sections 30A and 30B of the Building Act.
  • Prohibiting builders (or a person who acts as a domestic builder for building work) from appointing a building surveyor on an owner’s behalf and prohibits building surveyors from accepting such appointment (although builders may recommend a private building surveyor to an owner). See new sections 78(1A) and (1B) of the Building Act.
  • Requiring builders to provide owners with a copy of the new Domestic Building Consumer Guide before they sign a major domestic building contract. The Domestic Building Consumer Guide is the contract information statement required by section 29A of the Domestic Building Contracts Act 1995.

Implementation of stage three of the Act

The third stage of the Act came into effect in early 2017. This stage was most relevant  for dispute resolution practitioners as it implemented a new dispute conciliation framework which is detailed in part 2 of the Act. This framework means that conciliation of building disputes will now be handled by Domestic Building Dispute Resolution Victoria (DBDR).

DBDR operates in a similar manner to the Victorian Small Business Commissioner (VSBC), which handles retail tenancy disputes. The DBDR is overseen by the Chief Dispute Resolution Officer who is supported by conciliators and technical assessors, qualitied to assess domestic building work.

The DBDR website sets out the eligibility criteria to consider when applying for conciliation of a dispute. Specifically the dispute must:

  • ‘involve the building owner; and
  • not be the subject of a VCAT proceeding, currently or previously; and
  • not relate to building work that is more than 10 years old; and
  • be about domestic building work including construction, renovation, alteration, extension, demolition, improvement or (some) repairs to a home.’

The most significant aspect of the DBDR is that except for injunctive relief, all domestic building disputes must now be conciliated by DBDR before an application can be made to VCAT. It is in this respect that building disputes are now like retail tenancy disputes in terms of the fact that an application cannot be made to VCAT until the parties have attempted to mediate.

Importantly, even if the dispute is not resolved following conciliation by the DBDR, the Chief Dispute Resolution Officer has the power to make a binding ‘dispute resolution order’ which may stipulate (amongst other things) any of the following outcomes:

  • Repair, rectification and/or completion of the defective or incomplete work by a specified date.
  • Payment of money to the builder for completion of the building work by a specified date.
  • Payment of money into the DBDR trust fund to be held until the defective or incomplete building work is fixed or competed.
  • Payment of the reasonable costs associated with another builder rectifying or completing the building work in circumstances where it would be unreasonable to allow the original builder to attempt rectification, due to the poor quality of work.

Even if one of the parties to the dispute refuses to participate in the conciliation in good faith, the dispute can still be conciliated. For example, if a binding dispute resolution order is made and one of the parties did not participate in the conciliation in good faith, that party may be liable for the associated costs. Further, builders may face disciplinary action if they breach a binding dispute resolution order issued by the DBDR.

In the event a binding dispute resolution order is made and one of the parties disputes the order, that party can seek a review of the order through VCAT. However, if a party seeks such a review, it may be at risk of an adverse costs order if VCAT finds that the party’s application lacks substance or merit or if the party does not achieve an outcome that is better than the outcome achieved through the conciliation or the dispute resolution orders with DBDR.

Ultimately, the purpose behind the implementation of the DBDR is to significantly reduce the costs and stress for all parties involved in domestic building disputes by avoiding an application to VCAT and a subsequent proceeding.

Key takeaways

 Ultimately, the purpose behind the implementation of the Act is to create a framework which:

  • improves conciliation of domestic building disputes;
  • improves the information provisions for consumers;
  • strengthens registration requirements;
  • reduces the case load of VCAT;
  • improves the discipline of building practitioners;
  • provides additional powers to building surveyors and to the VBA to direct builders to fix non-compliant building work; and
  • ensures greater oversight of building works.

To discuss this further or for more information please contact:

Ben Wyatt
Principal
Sladen Legal
T +61 3 9611 0115l M +61 409 173 928
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: bwyatt@sladen.com.au                                                                                                          

Annabelle Moylan
Associate  
Sladen Legal
T +61 3 9611 0148
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: amoylan@sladen.com.au